Wildhorse Potions, Inc., a pharmaceutical company, bought a machine at a cost of $2 million five years ago that produces pain-reliever medicine. The machine has been depreciated over the past five years, and the current book value is $768,000. The company decides to sell the machine now at its market price of $1 million. The marginal tax rate is 35 percent. What are the relevant cash flows?
Relevant cash flow =
How do they change if the market price of the machine is $600,000 instead?
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